Brussels Playbook — New Grexit ultimatum — Tsipras Euro Parliament test — Trouble in China

 

Excellent summary and run-down on meeting yday and coming week from Politico's Ryan Heath…

 

 

 

 

Subject: POLITICO Brussels Playbook — New Grexit ultimatum — Tsipras Euro Parliament test — Trouble in China

 

by Ryan Heath | @PoliticoRyan and rheath@politico.eu | Subscribe: http://politico.eu/registration/

NO WORDS — GREEK GOVERNMENT TURNS UP AGAIN WITH NO NEW PROPOSAL: They have no words, and neither do I. Here are some from others. Donald Tusk called it "the most critical moment in the history of the eurozone." Greece's most international-oriented newspaper eKathimerini is worried: "We are dangerously close to a huge disaster and yet we still appear oblivious to what is happening, living on an entirely different planet to the rest of Europe." http://bit.ly/1eDJOja Meanwhile the new Greek finance minister was photographed with the notes he made on paper from his Brussels hotel — including a reminder to "avoid triumphalism." http://bit.ly/1HdDl8N

EURO SUMMIT BREAKS WITH NO PLAN EXCEPT TO MEET AGAIN: http://bit.ly/1CoyMd3

TSIPRAS AGREES... TO FACE EUROPEAN PARLIAMENT: After calculated words from Jean-Claude Juncker yesterday about his respect for European democracy, and outcries led by Liberal leader Guy Verhofstadt, Greek Prime Minister Alexis Tsipras is coming to Strasbourg to face the music, AND ask for cash. WATCH from 9:30 am CET http://bit.ly/1HdhcEn

GREEK GOVERNMENT TO ASK FOR MEDIUM-TERM LOAN: Tsipras wants a loan. German Chancellor Angela Merkel says there's no basis for it (and that a further debt haircut would be illegal). Eurogroup chief Jeroen Dijsselbloem says any loan would have to be a medium-term one. Greece has already received €130 billion from the European Stability Mechanism. Ireland (€17.7 billion) and Portugal (€26 billion) are the other beneficiaries.

WHAT IS THE ESM? The euro area's permanent crisis resolution mechanism: http://bit.ly/1HepSh1

DEADLINE FARCE FOLLOWED BY SUNDAY GAUNTLET: The leaders can't agree on what they agreed, or didn't agree, as to the final deadline for a Greek deal. It could be anything from Wednesday to Sunday, as James Kanter notes: http://bit.ly/1NMi2wD. Donald Tusk has thrown down the gauntlet, however: "The stark reality is that we have only five days left to find the ultimate agreement... I have to say loud and clear that the final deadline ends this week."

JUNCKER ADMITS DETAILED GREXIT PLANS ARE READY: "We have a Grexit scenario prepared in detail. We have a scenario as far as humanitarian aid is concerned." POLITICO's summit wrap is here: http://politi.co/1dKG7aN

YOUR MOVE, GREECE — 90 SECOND VIDEO WRAP: http://bloom.bg/1J3eYbL

QUOTES OF NOTE AROUND THE LEADERS TABLE: I've never seen such an uncensored array of contempt and frustration from a set of leaders towards another leader who is their ally, colleague and "member of the family." A couple of exceptions: François Hollande says he'll "spare no effort to find agreement"; Matteo Renzi also thinks it could be "fairly easy" to find a solution (really!). All the rest make sobering reading for Greece this morning:

Alexander Stubb (Finnish finance minister): "No, we are not ready to ease Greece's debt burden. We have already done that."

Joseph Daul (European Parliament): "Coming with empty hands to Eurogroup shows again their incompetence & recklessness."

Werner Faymann (Austrian chancellor): "Not a single person today said that the Greferendum made the situation easier."

Dalia Grybauskaitė (Lithuanian president): "For the Greek government it is every time 'mañana'…"

Taavi Rõivas (Estonian prime minister): the "message to Tsipras could not have been more clear" and "this is the last straw. Estonia, like many other European countries, does not accept a debt write-off."

Enda Kenny (Irish prime minister): "Situation now more complex and difficult than before the referendum."

Mark Rutte (Netherlands prime minister): "We still hope for miracle."

Louis Michel (Belgian prime minister): "He hasn't made concrete proposals, even after the referendum. There was no concrete proposal, there were [only] short-term requests for finance."

Toomas Ilves (Estonian president): "Greeks reaffirmed their democracy; but they also asserted the priority of their democracy over other countries."

TSIPRAS' TAKEAWAY: "Leaving the summit, a grinning Tsipras said Greece would respect the time frame given by its creditors and promised an agreement by the end of the week 'at the latest,' according to the Proto Thema newspaper. He said there was a 'positive climate' in the room and that the other leaders understood that this was not just 'a Greek problem but a European one.'" http://politi.co/1dKG7aN

THE OBAMA CURVEBALL: Tsipras spoke with U.S. President Barack Obama, who predictably wants to see a quick and fair resolution. Which could mean anything. Don't read into it — unless Obama is offering to print U.S. dollars and parachute them into Greek central bank, he's a "helpless bystander," as Edward Luce explored on Monday: http://on.ft.com/1flEQsD

ONE TEST FOR THE EUROPEAN PARLIAMENT THIS MORNING: Can MEPs use the sunlight of Parliament to force all 28 EU leaders to get real? National leaders have failed; unelected leaders have failed. The Parliament today can either join the navel-gazing or it can use its cross-examination of Tsipras to get beyond numbers and connect ordinary Europeans into the debate, while holding all European leaders to account. It will be a sight to behold.

EIGHT TESTS FOR TSIPRAS IN PARLIAMENT: One advantage of a closed-door EU summit is you are free to spin your version of events once you leave the meeting. Your national press pack will probably believe most of what you say. That luxury doesn't exist in the bright lights of Parliament. And that's before Marine Le Pen and Nigel Farage get their Euroskeptic teeth stuck into you.

Here are some questions Tsipras needs to answer in his speech this morning, alongside showing due deference to the Parliament (MEPs hate nothing more than a condescending visitor). Whether Tsipras hits these notes or not will affect his emergence as either Midas with the golden touch, or as Sisyphus the eternal trickster. I group them into Fairness, Sustainability and Practical issues.

FAIRNESS
1) Why should countries poorer than Greece, that reformed without bailouts, give Greece money for a third one?

2) Why should other bailout countries be the ones who stick by their word, while Greece gets a free pass?

3) Why must the EU break and twist rules so that, for example, Greece can continue to offer well-off tourists a tax discount when visiting Greek islands?

SUSTAINABILITY
4)  Why will this time be different? (Structural reforms like digitization of public services and service sector liberalization, rather than bold cuts, have been mostly deferred and ignored until now)

5) What will the creditors get in return for the €30 billion or so Greece wants to borrow?

PRACTICALITY
6) What are the true red lines for Greece, and what are the nice-to-have/let's-talk issues?

7) What is the timeline and plan for re-introduction of the drachma if an agreement cannot be reached?

8) How much humanitarian aid would be required to ensure social stability?

BY THE NUMBERS: €12,000 — the saving on the most expensive bottle of champagne on the Greek island of Mykonos (Armand De Brignac Methouselah Midas Champagne), thanks to the VAT discount the Greek government wants the islands to keep (13 percent compared to standard 23 percent). http://bit.ly/1IHQSI1

IMF — WAS NEVER COMFORTABLE LENDING TO GREECE: Newly and quietly released minutes from the 2010 International Monetary Fund meeting that agreed to make loans to Greece show the IMF always had strong doubts it would be repaid. Great work by Paul Blustein here: http://bit.ly/1KQJvhs

CHINA — STOCKMARKETS IN TROUBLE; GLOBAL DANGER AHEAD: Greece is a small economy that's nearly always been in one kind of economic drama or another over the last 200 years. China is now the world's biggest by purchasing power, and second biggest in brute terms, and it's having the wildest stock-market ride. "Over 700 Chinese companies have halted trading to 'self preserve,' according to the state media. That means about a quarter of the companies listed on China's two big exchanges — the Shanghai and Shenzhen — are no longer trading." http://cnnmon.ie/1dKE7zr. 

CHINA — WILL GOVERNMENT INTERVENE TO PROP UP MARKET? Gavyn Davies for the FT foreshadows this scenario: "It seems unlikely that the authorities will allow the market to drop much further. They are concerned that a stock market crash could take consumer confidence down with it, and that would be fatal for their economic strategy. They have therefore set a target of 4500 on the Shanghai Composite index, 20 percent up from here. Unlike many western nations, they will not be too squeamish about what they have to do to prop up the market." http://on.ft.com/1HKfroz. Alen Mattich at Wall Street Journal says "Investors' heavy use of margin debt to buy shares is a particular worry given the Chinese economy's large shadow banking sector. It's hard to know how far the fallout of a market crash might reach. And China's policy makers don't want to find out." http://on.wsj.com/1S67s4K

IRAN — TALKS ARE CONTINUING: It's not only Greece that can't meet a deadline. http://on.wsj.com/1LUEl5T

RUSSIA — 50 "ONLY IN RUSSIA" MOMENTS TO MAKE YOU LAUGH: published by Moscow Times: http://bit.ly/1MbvXvD

RUSSIA — FOREIGN AFFAIRS MAGAZINE: Two articles published today (partial paywall). One on Russia's Far East under pressure: http://fam.ag/1Cizw31; the other on Baltic states: http://fam.ag/1R7gljw.

PRIVACY — ESTONIAN PRESIDENT LASHES OUT AT U.N. POLITICKING: "The U.N. now has a digital privacy investigator. The best candidate didn't get the gig," wrote Toomas Ilves on Twitter after Germany moved to install its preferred and more privacy fundamentalist candidate: http://slate.me/1JM0McQ

DIGITAL MAFIA — HOW HACKERS GOT DRUGS INTO ANTWERP PORT: The "mob's IT Department" relied on two tech consultants to hack the port authority in order to smuggle heroin and cocaine to the continent. Jordan Robertson and Michael tell the tale: http://bloom.bg/1RjaTdg

WORTH A LOOK — A MAP OF EUROPE'S DECLINING POPULATIONS: Lithuania and Latvia are shrinking fastest. http://bit.ly/1RiCHyt

LONDON — UNDERGROUND STRIKE TODAY: http://bit.ly/1flIZNa

ÜBER-ORGANIZED: Erste Lesung (meaning: First Reading), a German public affairs firm, has published a new edition of Übersicht, a one-page overview of institutional events, party conventions and elections). http://bit.ly/1Tj6kxn

BANKERS ROCK: If you want proof that the Masters of the Universe are mere mortal after all, look no further than the European Banking Federation (EBF) CEO Wim Mijs, rocking it out on-stage at the EBF summer party. https://vimeo.com/131919219

REMEMBERING 10 YEARS SINCE LONDON'S 7/7 BOMBINGS: Millions remembered yesterday where they were when terror took over London, at memorial services across Britain. The selflessness of strangers, and the sense of unity in London's diversity, are themes in the coverage. By pure chance, I turned away at the last minute from the train carrying the first bomb, to continue a conversation with a friend. 52 others didn't share that luck. Here are stories from the heroes that day: http://politi.co/1Henabj

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